Opinion
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Lessons from Sears bankruptcy

It isn't unusual or uncommon to see businesses file for bankruptcy or close up shop unexpectedly and leave their employees in the lurch. Somehow, we were all a little surprised by Sears, who filed for bankruptcy protection in June of this year. In total, 2,900 people lost their jobs and 59 stores were closed. Severance packages disappeared along with those jobs and retirement savings no longer existed as creditors are put ahead of employees when it comes to repayment.

We shouldn't have been surprised. We've watched Sears limp along for decades. Their footing as one of Canada's most trusted retailers lost stability as time went on. And they aren't unique. We've watched many stores evaporate from our malls and plazas. We remember you Zellers and K-Mart. And who doesn't miss $1.44 Days at Woolco? The retail landscape continues to evolve and we don't have to guess too hard as to what large retailers will be suffering next. We all play some role in the demise of those stores. It's not all about interest rates and poor business plans. The economy controls how much money we spend but we make the final choices in where we spend it. I'm not laying blame, just asking you to look at your accountability. If you're buying everything online from Amazon or crossing the border to shop, don't be indignant when Canadian stores that employ your family and neighbours close their doors.

Bankruptcy is a tricky system to understand if you're on the outside looking in. Especially if you're an employee that's been shown the door. You have little recourse to fight back because the system in place places you squarely at the bottom of the priority list. If you had been fired, you could receive a severance package. The Companies'Creditor Arrangement Act gives companies the opportunity to avoid bankruptcy while paying some monies owed back creditors. The Plan of Arrangement between the debtor and the creditor does not include staffing, unless you are shareholders.

The biggest burn, apart from the obvious, is the court approved $7.6 million retention fund to be given as a bonus to 43 senior managers and key Sears employees who will be staying on through these stormy seas. When you're on the outside looking in, it seems extremely unfair and like a slap in the face for your decades of service. And it is. The system is set up to protect the company and the creditors, leaving no legal recourse for employees. Sears has managed to get CCAA approved a $500,000 "Hardship Fund" for former struggling employees. You have to apply and be approved to get a small slice of this pie though. Kind of like the Hunger Games of unemployment.

The first public reaction to the retention fund was to boycott Sears. It's always our short-sighted reaction to anything we don't agree with. Find the easiest, least-stressful demonstration to show my outrage. So you buy your winter boots from The Bay instead of Sears. Good for you. It might give you personally an immediate sense of selfrighteousness, but it doesn't help the remaining 14,000 Sears employees. And it doesn't get to the root of the problem.

Legislation has to change to shelter employees in the event of bankruptcy protection or bankruptcy. The system is designed to put a business back into some form of stability, but the employees are collateral damage. Creditors have the ability to sue. Employees are too busy trying to paste back together their lives. Losing your job is more than just losing an income. It's a devastating blow to your mental health. And there is no one watching out for them.

Sears is not the first (remember McCormick's?) nor will it be the last large employer to file for bankruptcy protection at the expense of its employees. The question is, do we have the leadership at the legislative level to make effective changes to make the employees a priority? The trickle-down effect from these situations is great. Unemployment costs, health care, social assistance, personal bankruptcy, housing. It all ties together. When the average Canadian household is paying 14.2 per cent of its disposable income to debt repayment, many people are one incident away from losing everything. How many of these 2,900 people who lost their jobs this summer are now at that breaking point? Ask your MP how they can create a more inclusive Companies'Creditor Arrangement Act and why they haven't acted on it yet.